Land - Landlord & Tenant (3)

3. Roscoe owned some run-down commercial premises which he hoped to obtain planning permission to develop. Meanwhile he agreed to lease the premises to Slater at a monthly rent. The lease was to continue until Roscoe obtained planning permission, but Slater could terminate the arrangement at any time by giving one month’s notice. Slater went into possession and paid rent. Recently Roscoe was refused planning permission and he gave Slater one month’s notice.
Discuss.

Certainty of term
- Before a lease can take effect, the maximum duration of the term must be known or made certain
- Certainty of term distinguishes freehold from leasehold
- If a lease’s maximum duration is not known, the lease is void according to Lace rule
- However, if consider this to be a periodic tenancy, Slater becomes a periodic tenant on a monthly bases
- According to Prudential case, any restriction of rights of notice to terminate a lease by either the landlord or the tenant or both sides will be void
- Thus ‘the lease was to continue until Roscoe obtained planning permission’ clause is voide as it limits Roscoe’s right to give notice to terminate the lease
- Conclusion: Roscoe’s one month notice to Slate is good and will be upheld; Slater has to leave

Land - Landlord & Tenant (2)

2. As Ann and Liza were close friends and were doing the same postgraduate course, they decided to share a flat. After looking for a month they found a two-roomed flat owned b Lionel which suited them. Lionel insisted on each of them entering into separate but identical “licence agreements”. Each provided that the licence was to run for nine months and that the license was to pay $500 per month as a licence fee as well as 50% of the outgoings on the flat. The agreement further stated that the licensor should retain a key to the flat and that he reserved the right to occupy the flat whenever he wishes. The agreement denied that the licensee was to have exclusive possession of the flat or any part of the flat. Ann and Liza each signed their agreements and entered into possession of the flat. Nine months later Lionel told them to leave. Are they tenants or licensees?

Lionel retain the key to the flat
- If retention of the key is for emergency, repair or limited purpose, it will not negate exclusive possession
- If retention of the key is for general purpose of entering the flat at reasonable times, it will negate exclusive possession

Lionel reserves the right to occupy the flat whenever he wishes
- Is it genuine or not (to avoid the Rent Acts)? Might be struck down (i.e. ignored)

The agreement denies the licensee was to have exclusive possession of the flat or any part of the flat
- Ann and Liza enter into separate but identical ‘licence agreement’
- It is a sham to avoid tax (HL in Street v Mountford criticize the ruling of same facts in CA as a licence as the facts show it is a sham to aovid tax)
Intention of Ann and Liza?
- Will they accept join rent liability? i.e. each will be held liable individually for the whole of rent
- If yes, there is intention to be joint tenants
- If no, cannot be joint tenancy

Land - Landlord & Tenant (1) - updated1

1. In 1994 Peter granted a lease of a house to Thomas for a term of 20 years, Thomas covenanting to pay rent, to keep the house in a good state of repair, not to use the house for business purposes and to purchase anything he needed for the garden from Peter’s garden-shop. Performance of the covenants was guaranteed by a surety, Simon. In 1996 Thomas granted a sub-lease of the house to Richard for a term of ten years and in 1997 he assigned his lease to Stephen. In 1998 Peter assigned his reversion to Arthur. Arthur has received no rent this year, the house is in urgent need of repair and Richard is proposing to start a business in the house. Neither Thomas nor Richard have ever purchased their garden requirements from Peter’s shop.
Who can enforce the covenants and against whom? Would your answer be the same if Peter had granted Thomas the lease in January 1996?

* Since the lease was granted in 1994, pre-1995 Landlord & Tenant (Covenant) Act rules apply, (even if Thomas assigned the lease to Stephen in 1997, the pre-1995 rules still apply

Peter assigns reversion to Arthur
- LPA 1925 s141: passing of benefits of covenant to assignee that relate to the subject matter of the lease
- Arthur can enforce the covenants to have rent paid, have the house repaired and not to have the house for business purpose
- Arthur cannot enforce the covenant of ‘Thomas purchasing anything he needed for the garden from Peter’s garden-shop’ because it is personal covenant in nature
- Peter loses all the right to Arthur

Against whom can Arthur claim his rights?
Thomas?
- Under old law of original tenant liability, Thomas is liable for the whole duration of the original lease, i.e. 20 years for covenants especially money claims – Doctrine of privity of contract

Simon?
- Simon, as a surety to guarantee performance of covenants, is liable to the same degree as Thomas

Stephen?
- Thomas assigned the lease to Stephen in 1997, therefore Stephen gets the legal estate of what is left of the 20-year lease, i.e. 17 years
- Stephen got all the interests from Thomas, thus Stephen becomes the Richard’s landlord
- Under old common law of Spencer’s rule: burden of covenants will pass to assignee if
- Does ‘privity of estate’ exist between the Arthur and Stephen so as to allow enforcement of the covenants?
- Do the covenants ‘touch & concern’ the land?
- Test of ‘touch & concern the land’ (Swift Investments)
- Could the covenant benefit any owner of an estate in the land as opposed to the particular original tenant (indicates a proprietary covenant)?
- Does the covenant affect the nature, quality, mode of user or value of the land (indicates a proprietary covenant)?
- Is the covenant expressed to be personal?

Richard?
- Spencer’s rule applies
- There is no privity of estate between Arthur and Richard (sub-tenant), therefore Arthur cannot sue Richard
- Under doctrine of restrictive covenant, Arthur can sue on the restrictive covenant (here, ‘‘not to use the land for business purpose’) directly against subtenant

If Peter leases Thomas in 1996
- Applies LTCA 1995: No distinction between legal and equitable lease
- LPA 1925 s141 no longer applies
- Peter assigns reversion to Arthur: LTCA s3
- Benefits and burdens pass to assignee of reversion
- No more requirement of ‘relate to subject matter of the land’
- Thomas assigns the lease to Stephen: Original tenant liability not applicable, Thomas is no longer liable for the land (LTCA s5); However, recent lease will include a clause ‘tenant will not assign without landlord’s consent’. Landlord will require the tenant to sign the Authorized Guarantee Agreement (AGA) in which tenant guarantees the new tenant performs to covenant or the original tenant will be liable. When new tenant assigns further, the original tenant will be release from the liability, while the new tenant will be asked by the landlord/assign of reversion to sign a new AGA and be bound
- Simon, as a surety to guarantee performance of covenants, is liable to the same degree as Thomas
- If Thomas is bound by AGA, same as Simon
- If Thomas is released based on LTCA s5, same as Simon
- Thomas assigns the lease to Stephen: LTCA s3 – S receives all the benefits and burdens
- Spencer’s rule not applicable
- No touch & concern the land requirement
- No requirement of privity legal estate
- s3(6)(a) express personal covenant is exempted from being automatically passed to assignee; per BHP, it is likely that covenant will be exempted if it’s personal in nature
- Richard as a subtenant is not covered by LTCA 1995
- Follow the old law: no privity of legal estate, Arthur can’t sue Richard; However, Arthur can hold Richard liable directly with the Doctrine of restrictive covenant

Land - Trusts & Coownership (3)

4. In 1996, Donald and Liz bought Rose Cottage. Donald was registered as the sole proprietor. The purchase-price was $100,000, of which Donald paid $30,000, the remaining $70,000 being raised on the security of a mortgage (for which Donald was solely responsible) with the Nationsave Bank. They intended that Donald would pay all the mortgage instalments, and that Liza would pay all the household bills. In 1999, Liz gave birth to twin girls and in 2000 she inherited $10,000, which she used to pay off part of the mortgage debt. In 2001, while Liz and the twins were away on holiday, Donald mortgaged the cottage to the Easyquick Bank for $100,000, using part of the money to redeem the earlier mortgage. Now Donald has lost his job and has defaulted seriously on his mortgage repayments. The bank seeks possession of the cottage with a view to selling it.

* Facts resemble Le Foe v Le Foe
Liz has beneficial ownership?
- If follow Rosset: No, only original contribution to the purchase price or mortgage counts, later contribution (e.g. Liz inherited $10,000 which she used to pay off part of the mortgage debt) doesn’t count
- If follow Le Foe: Yes, broad brush approach even though there is no common intention constructive trust – she paid all the household bills, and part of the mortgage debt

Issue of priority?
- Liz might have LRA 1925 s70(1)(g) overriding interest with actual occupation
- However, 1st mortgage: acquisition mortgage – follow doctrine of implied waiver, 1st mortgage took precedence over any interest that Liz might have
- 2nd mortgage: part of the money to redeem 1st mortgage – that part take precedence same as 1st mortgage (Prestige, Le Foe)
- Thus priority as follows: 1. Easyquick bank mortgage amount that redeems the 1st mortgage; 2. Liz; 3. Easyquick bank rest of 2nd mortgage; 4. Donald

Court’s discretion?
- TLATA s14
- TLATA s15(1)(d) – Court tends to favour secured creditors
- Likely to postpones order of sale because of the twin girls s15(1)(c)

Proceeds of sale?
E.g.:
1st mortgage: $70,000, paid off $20,000
2nd mortgage: $100,000 paid off the rest of $50,000 of 1st mortgage
Distribution of the proceeds of sale:
1. Easyquick Bank: $50,000 for the payment of 1st mortgage by the 2nd mortgage
2. Liz: her interest as per court’s discretion (using broad brush approach on her contribution)
3. Easyquick Bank: $50,000 the rest of 2nd mortgage
4. Donald: anything left, if at all

Land - Trusts & Coownership (2)

2. In 1980 Mr. and Mrs. Hall purchased a cottage as their matrimonial home. The price of the cottage was $60,000, of which Mr. Hall provided $30,000, Mrs. Hall provided $20,000, and Norma (Mrs. Hall’s mother) provided $10,000 as a wedding-gift. The cottage (the title to which was not registered) was conveyed into Mr. Hall’s sale name. In 1987 Mr. Hall mortgaged the cottage to the Quickfix Bank in order to raise some money to invest in his brother’s construction business. Mrs. Hall knew about the mortgage idea, but when the bank’s representative came to inspect the cottage prior to granting the mortgage, she was away on a week’s holiday. Recently Mr. Hall has started to default on his mortgage repayments, and the bank is threatening to bring possession proceedings with a view to selling the cottage.
Advise Mrs. Hall. If the cottage were sold, how would the proceeds of sale be divided? What if the LRA 1925 or the LRA 2002 had applied?

Effect of 1980 conveyance?
- Mr. Hall holds the legal estate solely on trust for himself and Mrs. Hall
- It is a trust for sale (instead of trust of land) because the conveyance is pre-1996
- Mrs. Hall has a resulting trust due to her contribution of $20,000
- Norma has no interest in the cottage because her contribution is pure gift
- The rebuttable presumption of a gift of contribution to the purchase of land from parent is a gift not only for the child of the parent but for the couple – presumption can be rebutted
- Mr. Hall’s share becomes $30,000 + ½ of Norma’s contribution, i.e. $5,000 = 35/60 = 7/12
- Mrs. Halls’ share becomes $20,000 + ½ of Norma’s contribution, i.e. $5,000 = 25/60 = 5/12
- Uneven share of the interest, the coownership is Tenant in Common

Effect of mortgage?
- Priority of interest: does mortgage take free from or subject to Mrs. Hall’s interest?
- For unregistered land: Mrs. Hall’s interest is not registrable because it is an unregistered land (LCA only provides statutory right to occupation which is a personal right and not proprietary right) and her interest is not overreachable because there is only one trustee Mr. Hall
- Doctrine of Notice (either actual notice or constructive notice – obvious via reasonable inspection)
- Apparently Quickfix Bank hasn’t done enough, it should have re-inspected the cottage after Mrs. Hall is back from holiday
- Therefore Bank is subject to Mrs. Hall’s interest which has constructive notice
- Doctrine of implied waiver (consent of mortgage and impliedly agrees the mortgage to take free from own interest)
- Mendelson: actively support the mortgage idea – implied waiver
- Cann: should have known that mortgage is necessary – implied waiver
- Acquisition mortgage (mortgage to buy a home) is likely to imply waiver
- Mrs. Hall here knows the mortgage idea, but consent? Not necessarily
- Moreover, the mortgage is not acquisitional and she gets no benefits from it
- Therefore not likely to apply doctrine of implied waiver

Sale / Possession?
- Apply Dhillon
- TLATA s15(1)(a): implied trust, irrelevant
- TLATA s15(1)(b): express trust, relevant
- TLATA s15(1)(c): irrelevant
- TLATA s15(1)(d): relevant
- TLATA s15(3): relevant
- TLATA s14: these are must-consider factors
- Consider Shaire: Court said s15 is designed to change the law; case law under LPA 1925 s30 should be treated with caution
- Consider Bell, Mears, Slayford: Court prefers priority to interests of secured creditors
- AJA 1970 s14 & 15: sale can be postponed if due mortgage is intended to be paid (nothing suggests Mr. Hall will be doing this)

Proceeds of sale?
- Order of Priority: 1. Mrs. Hall, 2. Bank, 3. Mr. Hall
- To determine the amount:
- Resulting trust: old rule is that the amount is determined by original contribution and no variation unless coowners agree to alter
- Constructive trust of common intention: old rule is based on the agreement of share, if the agreement doesn’t state the percentage of share, court will apply broad brush approach
- Midland Bank v Cooke: husband’s contribution 95%, wife’s contribution 5%; resulting trust rule should apply but court took broad brush approach and ordered 50% 50% - blurred the distinction between resulting & constructive trust – bad as makes it uncertain for bank issuing mortgage
- Burns v Burns: Court ruled Mrs. Burns got nothing – But if the case is brought to the court now, and if Mrs. Burns even contributed only a bit, court would order 50% to her
- If follow Cooke: Mrs. Hall may get more through broad brush approach (based on her other and subsequent contribution to the home)
- If follow old rule: Mrs. Hall will get original contribution = 5/12

*if it is registered land: subject to registered interest and overriding interest but free from anything else
- LRA 1925: If Mrs. Hall’s interest not registered, s70(1)(g) overriding interest with actual occupation. Even though she is away on holiday at the grant of mortgage, but physical presence at that point of time is not necessary
- LRA 2002: If Mrs. Hall’s interest not registered, Schedule 3 para 1(2)(c) interest that overrides with actual occupation which is obvious by inspection with reasonable care

Conclusion: principles are different but consequences the same

Land - Trusts & Coownership (1)

The flow of the coming posts follows Dr Simon Coldham's Revision Course in Apr & May 2006 in Hong Kong. Thanks for his lecture, I finally start to understand what Land Law is about...

1. In 1998 Mr. Norton, who had three sons studying in London, decided to buy a flat for them to live in. He paid the whole of the purchase-price and the flat was registered in their names (Mark, Luke and John) as beneficial joint tenants. In 2000 Mark got married, moved out and sold his interest in the flat to John. In 2001 Luke wrote to John offering to sell him his interest in the flat. John accepted the offer in principle, but they had still not agreed on a price when Luke was killed in a climbing accident. Luke left his estate to Mark and John equally. Disputes have now arisen between Mr. Norton, Mark and John as to (i) who owns the flat, (ii) who is entitled to occupy the flat, and (iii) whether the flat should be sold.

* Separate legal estate and beneficial interests

Effect of 1998 conveyance?
- M, L and J hold legal estate on trust (trust of land) for themselves
- M, L and J are joint tenants (at law & in equity)
- Mr. Norton has no beneficial interest as it is a pure gift

2000 M sells to J
- There is severance: only occur in equity, the sold joint tenant part becomes tenant in common
- John: tenant in common 1/3 from M’s sale
joint tenant 1/3 original
- Luke: joint tenant 1/3 original

2001 L writes
- There is only agreement in principle, no agreement on price
- If there is no severance (because it doesn’t fall into any of the 4 methods)
- After L’s death, right of survivorship operates on L’s death (because of joint tenant), M & J hold the legal estate on trust for J as sole beneficial owner
- If there is severance (arguing that agreement in principle can be interpreted as mutual agreement)
- There is no sale of interest (L is dead before the conveyance)
- But mutual agreement can lead to severance
- If it is severed, L’s interest becomes Tenant in Common (1/3) and J’s interest becomes Tenant in Common as well (2/3)
- After L’s death, no right of survivorship but split equally between M & J
- M & J hold the legal estate for themselves as Tenants in Common: M getting 1/6 – half of L’s estate; J getting 5/6 – his own, M’s, and half of L’s estate

Court’s decision factors in occupation and order of sale
- TLATA s15(1)(a): Express trust
- TLATA s15(1)(b): implied coownership trust
- Purpose of Mr. Norton may no longer exist (bought a flat for 3 sons to live in during their studies) unless purpose is interpreted as the purchase of the flat is for any of the son who survives
- TLATA s15(3): beneficiaries’ wishes will be considered (majority may prevail)
- Court may encourage J to buyout M
- TLATA s12: Court may order J have the right to occupy
- TLATA s13(5), (6): Court may order J to pay pro-rata occupational rent and expense to M as compensation
- TLATA s14, 15: Court may order sale and split the proceeds according to percentage of share

Last Mile - LLB

26 more days and I'll attend the first of my three final year LLB examinations... God bless us all!!!!!